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Farmer Company issues $25,000,000 of 10-year, 9% bonds on March 31, 2014 at 97 plus accrued...

Farmer Company issues $25,000,000 of 10-year, 9% bonds on March 31, 2014 at 97 plus accrued interest. The bonds are dated January 1, 2014, and pay interest on June 30 and December 31. What is the total cash received on the issue date?

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Expert Solution

--Issue price = $ 25,000,000 x 97/100 = $ 24,250,000
--Accrued Interest for 3 months (1 Jan to 31 Mar) = $ 25,000,000 x 9% x 3/12 = $ 562,500

--Total Cash received = $ 24250000 + 562500 = $ 24,812,500 = Answer

ekkarill92 answered 2 years ago
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